Welcome to DreamTai Stock Trading Software blog.
Here, DreamTai members can post their views, ideas, opinions and list of stocks which they like and which have given a Buy Signal or Sell signal by DreamTai stock Trading Software.

Monday, December 25, 2006

George: How can you use deamtai to help short a stock ?24 Dec 06, 14:00George: When do you typically short a stock and what rules one should follow?23 Dec 06, 01:56Tom: If you buy stocks at there 52 week low do you like to buy when charts read red?

Hi,We buy stocks which are in an uptrend and short stocks which are in a downtrend.

Thursday, December 21, 2006

Still Tying to find higher power rankings 5 plus. How is the power rating calculated? By Volume and what else. I have some EFT's DIA QQQQ SPY etc. and thy all have low PR and their average volume is higher to some of the small caps I also have in my watch list.

Dear Sir/Madam,

Try looking for stocks which are at their 52 week high. They will have higher power ranking.

Look at your daily newspaper for those stocks which closed at their yearly high.

Sunday, December 17, 2006

But we were not successful in stocks like ATI which went down from 98 to 88.

We had another stock in pick with ticker symbol TARIt went as high as 26 and then crashed down to 18 at present.

That is why we risk only two percent of our equity on each trade.So, we do not run the risk of ruin if any one stock pick does not work out.At the same time, if any our our picks are successful, we can add more to our positions and make huge profits.

It is a game of chance in which we are trying to RIG the market in our favour by betting only on those stocks which show promise based on trend, volume and momentum.At the same time, we are betting just two percent on each stock.

You can not do THAT in the casino..can you ?

In the words of Kenny Rogers "You have to know when to hold them, know when to fold them."

Trading is a percentage game.Burn that rule into your brain and you'll save yourself a lot of headaches.

Question from a member:I'm trying to get higher power ranking stocks to look at, has anyone created a screener in MSN or Yahoo that will show those accounts with a sizable increase in volume compared to a week ago, month ago etc?

Answer:At present, I have not heard of such a screener. If any of our members have seen such a screener, can you please comment here ?

I have seen screeners on daily basis increase in volume.Here are some links:

Saturday, November 25, 2006

Today I will discuss about Stops, how to place them and the types of Stops.

It does not matter at what price you buy a stock. What matters is what price you sell the stock.

The price at which you can enter a stock position is not under your control. At one time Google was 200 and now it is $500. Even if I want, I can not buy it at 200. The entry price is not under my control.

However, once you buy it, you can sell at any time you want. The price at which you will sell will determine whether you have made a profit or a loss. You can sell it now, you can sell after 2 weeks.or whenever you want.

That is why, the placement of stops is very important.

There are two ways of placing stops:

1. Volatility Stops2. Stops at nearest Support or Resistance.

DreamTai uses Volatility Stops.It calculates the average range a stock moves per day and stops are placed at 3 or 4 times the average range in order to give it some space to move.

Here, let me explain with the help of an example. Look at the stock OMG. We had recommended buying it on September 29, 2006 at 44.37 and asked to place a stop at 37.86 which was the Volatility Stop.

If instead of Volatility Stop, you wanted to place a Support Resistance Stop, you will place the stop at the nearest support point, which in this case come to be around 36-37. It is safer to place the stop at slightly below the support point, say at 35 to prevent being stopped out by price spikes.

In this case, the Volatility Stop and the Support-Resistance Stop are nearly the same.

Look the the current chart of OMG. OMG had gone upto 60 and then a SELL signal was issued.

Currently OMG should be shorted. Dreamtai is giving a SELL SHORT at 45.09 and is asking to place a BUY stop at 51.02

Now, here is a QUIZ QUESTION for you. If you want to place a Support Resistance Stop, where would you place the BUY Stop ?

The answer is around 55. The nearest resistance on top is at 52 to 53. So, place a stop slightly higher at 55.

The Volatility stop is better in cases where the stock is strongly trending and has a sudden zooming upwards movement. In that case, the Support Resistance point is very far off. So, it will be better to use the Volatility Stops.

See Google. It has zoomed up to 505. Now, if we use the Support Resistance stop, it comes to be around 470 but if we use Volatility Stop, it comes to be around 492. We can buy more quantity of Google if we use the Volatility Stop.

So, which stop to use ?It does not matter which stop you use as long as the Risk per trade is less than 2 percent of your equity.

So, the next question is once you enter a position, should you use a trailing stop if the stock moves in your favour ?

Yes, it is always safe to use a trailing stop, but place it at the nearest support or resistance, otherwise, you will be stopped out by a price spike.

MEMBER QUESTION: If the risk control is already built into DreamTai, then a portfolio approach really isn't necessary as a tool to minimize risk,DreamTai has already factored that in right?

It depends on the investment approach you take. DreamTai does its job of risk control and market timing.

Now, it depends on you on how to build up your portfolio.

You can take the sector approach, like some portfolio managers do. Every week, look at Investor Business Daily and see which sectors are the hottest sector. Then find the hottest stock (stocks with larger power ranking in these hot sectors) and invest in these stocks.

MEMBER QUESTION: Stock or EFTs (DIA, SPY,QQQQ)What is the purpose of Power Ranking Tab in the DreamTai software ?

The stock power ranking shows the strength of the stock move. The higher the number, the more bullish the stock.Suppose, there were two stocks that went up by two dollars.For the first stock, the volume was one million, but for the second stock, the volume was thirty million. Obviously, there was a greater power for the second stock.The Stock Power ranking measures the power. If you are considering to buy many stocks, you can input them in DreamTai and buy the stocks with the highest power ranking.Conversely, if you are shorting, you should select the most negative power ranking stock.

Thursday, November 23, 2006

Question from a member:Nice software! Two questions, do you ever buy high power ranked stocks showing positive trend signals that are not listed as a buy on DreamTai?

Dear Sir/Madam,Thanks for your kind words.If there is a high power ranked stock showing positive trend signals but showing as red, I would wait till it turns green.

Here is the reason. First of all, no one can predict where the stock price will go..Not even the $20 million per year salary Wall Street Analysts.

Our aim is to maximise the probability of winning and minimise the risk of losing.

Here is how we do it.

1. The stock is above the blue moving average means it is in an uptrend.2. The stock has high power ranking means there is a lot of buying volume.3. The stock price bars are green means the stock upward momentum is turning positive.4. We set the stop loss so if the stock goes down below a certain point, we are out.

This will give you better odds of winning and low risk of losing. The maximum risk to us is only 2 percent while the upward gains can be a lot.So, it is safer to wait for a buy signal and then buy.

Question:Also, every buy recommendation assumes I have $10,000, if I have $5,000 I divide the recommendation by two and fill up my portfolio with enough stocks to spread the risk?

Yes, you can do that. Our aim is to risk maximum 2 percent in any trade. If you want, you can risk one percent or 0.5 percent of your equity. As long as it is less than 2 percent, you are OK.

By the way, did I tell you about Edison's nephew and his investment style ? Oh..I love telling about him !!